Does your strategy method build muscle or bend spoons?

It is always good to present your research findings to an experienced and expert group, particularly if the material is set to challenge their current thinking. Robust debate is an excellent method for material development; but the dialectic dines best on meaty issues and in the absence of frail personalities.

I’d been asked by the CEO of a financial services retail unit to critique the approach to strategy taken by his strategy planning group.

Such an assignment often takes on the air of a “tell me which of my children is the ugliest?” inquisition. However you address it, you know it will end in tears.

Deeper digging unearthed the real concern. Unforeseen macro-forces had dented the group’s performance and confidence. As a consequence, discretionary budgets had been cut, so the group had diminished latitude with which to cope with unplanned market swings. He really wanted to have a “more accurate picture of the future so we can plan more effectively.”

Sixty minutes of scouring through the planning department’s documentation in the late morning was awe inspiring. These were blue-blooded planners. The power-point presentations, with their serif font on a white background, gave a clue to the planners heritage; these folks were Royalty. But they were also mostly wrong. Or, according the CEO, entirely wrong, in the areas that mattered.

“We have the right strategy but for the wrong market,” was how he summed up the planning department’s performance. “In fact, I believe we have a Titanic of strategy, but we’re really bad about predicting the location, size, and preponderance of the icebergs. Thank goodness we had enough lifeboats in 2012.”

“And here’s the crux of the issue,” he continued. “If we can’t be better at forecasting, how can we build a stronger Titanic?”

“We’ve been ‘shocking’ our plans using some pretty sophisticated software. So we know what will happens if certain changes occur. The problem is, none of the changes they predict (his emphasis are he stared at his planners) actually occur in the way they (even more penetrating this time) predict.”

The discussion continued, becoming increasingly internecine. Now these being economists and planners the arguments were passionate but measured (in 6 different ways!) However, even their tempers began to crack. When the Titanic analogy was stretched to “the Captain doing the honourable thing,” I knew it was time for us to jump the metaphorical ship.

I intervened and stated that their poor strategic performance was a direct outcome of their preferred planning process.

There.

For the first time in twenty minutes we had silence. It appeared I’d just said “not just one of your children is ugly—they all are!”

I needed my own metaphor and possibly some physical protection. It was a working lunch so I took what was to hand. Given the client was Financial Services rather Insurance, I opted for spoon over knife. Not that economists are less fierce than actuaries, but Financial Services generally carry lower liability coverage. I wanted to limit my claim.

I held the spoon and starting bending it back and forth at the neck. This, I explained, represented their mechanical (collective) approach to strategy. They were trying to build a business plan that could withstand any conceivable assault. I went on to explain that this approach has two fundamental flaws.

Firstly, like each bend of the spoon, each successive failure of the strategy weakened it, and the effect was cumulative. The strategy, like the spoon, would eventually break.

Secondly, it is impossible to predict the timing and size of shocks and assaults on any strategy. No spoon could cope with any range of assault, and no planning department could conceive of every scenario—let alone the likelihood and timing of every scenario.

What is needed, I suggested, is the reverse. We need an approach to strategy that feeds on shock and uncertainty. What weakens others, should strengthen us.

For example. When you lift weights in the gym, you assault your body. The stress and strain you place on the muscle creates micro-tears which eventually repairs if given sufficient time and nourishment. With continued exposure to stress-bearing activity, the body strengthens, builds a higher metabolic headroom, and is able to deal with a wider and deeper range of unpredicted events; shortage of food and water, bacterial and viral invasion for example.

Our approach to strategy should be closer to building muscle, not building spoons.

The session ended with some exercises on the practical application of this approach and the contrast with their current method.

1. We listed the challenges facing the business with the help of the GOSH template.

2. The group then proposed to run some ‘muscle-building’ activities on product offers in order to build confidence in method.

3. The session ended with the Forecasters planning to test a process for scanning market changes rapidly. They grasped immediately the concept of detecting weak signals of change as being a more accurate predictor of market shift. Rightly though, this pilot process will run in parallel with the current forecasting model.